Employees of the Zara store at the Drake Circus Shopping Centre (Plymouth, UK) were shocked to learn on Tuesday that their store will close at month’s end, and were also surprised to hear that Apple will assume the remainder of the store’s 15-year lease. The new store would fill in Apple store coverage for the far southwest region of the country, specifically the Devon and Cornwall region. According to ThisIsPlymouth, the Zara stores occupies a two-level space totaling 21,045 square-feet, much larger than a standard mall-sized Apple store. It’s possible Apple will occupy only the ground floor of the Zara space. Apple is assuming the lease with nearly 10 years remaining, sources told the Web site, a practice Apple has done previously for buildings that are in desirable locations. The store would be about 45 miles from the existing Princesshay (Exeter) store. The timeline for the opening of the Drake Circus store isn’t known.
Apple will reportedly assume the lease of the soon-closing Zara store, which occupies a long, narrow space on two levels.
A reporter for the Salt Lake City (Utah) ABC-TV affiliate has confirmed with two sources that Apple will eventually open a store at the new City Creek Center mall, and has been offered a substantial incentive to locate there. In a report that aired tonight, ABC4/KTVX reporter Brian Carlson interviewed Coldwell Banker executive Brandon Fugal, who confirmed on-camera that Apple would locate at City Creek, and that a “major concession package” had been offered to the company. A second, unnamed source told Carlson the incentive offered to Apple was five years of occupancy, rent-free. A representative of Taubman, which manages City Creek, said the company does not reveal the terms of its leases. Tipsters pointed IFO to City Creek last November, and in February said The Gateway store would close when the new store opens. However, the timing of the new store opening is not known. In the retail real estate industry, it’s not uncommon for mall management to offer various rental incentives beyond lower rent, including construction allowances, a longer lease term, favorable lease termination conditions, a lower proportionate share of common area mall costs, and a lower percentage rental. That last incentive consists of both a set percentage of gross sales, and a breakpoint above which the percentage must be paid (e.g. 5.5 percent over $1,750,000 in year one). The breakpoint can change over the term of the lease, typically increasing each year, favorable to the tenant. It’s well-known in the real estate industry that Apple receives favorable treatment from landlords, who realize that an Apple store will increase mall traffic and sales at other retailers. In fact, some retailer lease agreements include “Apple proximity” as a condition of their signing a mall space lease.
Apple is moving forward to expand the size of its retail stores, and the Market Mall (Calgary) retail store is next on the list, according to tipsters. The store is now shoe-horned into a 36-foot wide space along one corridor of the single-level mall, with just 5,448 square-feet of total space. According to the sources, within a year the store will move to the now-empty space #R028 at the south end of the mall. That space is adjacent to a major mall entrance, has a curved 77-foot wide storefront, and offers 7,287 square-feet of space, or about one-third larger than the current store. Apple’s first stores were in the range of 6,000 square-feet, but trended smaller over the next eight years. About two years ago then-Sr. VP Retail Ron Johnson declared the stores to be too small. Since then even ordinary shopping center stores have trended back to the 5,000 to 6,000 square-foot size. A timeline for the expansion construction and the move for the Market Mall store isn’t known.
The existing Apple store will move its 35-foot wide storefront to a 77-foot wide location in a more conspicuous location.
The seventh Apple retail store in Spain will open this Saturday inside the Nueva Condomina shopping mall in the southern city of Murcia. The store fills in coverage along the Mediterranean coast of the country between existing stores in Valencia and Marbella. The first Spain store didn’t open until nearly 10 years after the retail chain was founded, but since then the roll-out has been among the fastest outside the United States. Insiders say four additional stores in Spain are scheduled to open within the next year, including a street-level store each in Madrid and Barcelona. This Saturday’s grand opening is at 10 a.m. and the first 1,000 visitors will receive a commemorative T-shirt.
Apple has officially updated its Web page of executive profiles with an entry for new Sr. VP Retail John Browett, at once establishing his official presence at the company and also creating a visual pecking order for the secretive company. Browett’s appointment was announced in January, and last week the company officially granted him stock rights. He’s the former CEO of electronics Dixons Retail in the UK, where he was tasked with bringing the company back from near-extinction. On the Web page updated today, Browett shoulders his way into the top of the executive line-up, visually right next to CEO Tim Cook. Previously, the photo for Sr. VP Retail was positioned three spaces to the right of Cook, behind Sr. VPs Jonathan Ive and Scott Forstall. When Johnson left the company last November, Sr. VP Eddy Cue appeared new on the page, to the right of Cook. Now, with the arrival of Browett to the page, all the executives except Cook have moved one space to the right to make way for his photo. But behind this visual presentation is a simple explanation—the alphabet. The execs are listed in alphabetical order by their last name after Tim Cook. Beyond these top executives, Apple keeps its employee organization chart completely confidential, preferring not to focus on levels of bureaucracy. Fortune famously create an org chart for the company last year, but the retail segment of the company contained just two entries.
On Browett’s individual profile page, Apple says he joined the company in April 2012 Dixons, where he was CEO since 2007. The profile also says Browett held “a series of executive positions at Tesco plc including CEO of Tesco.com,” and earlier advised retail and consumer goods clients at Boston Consulting Group. The profile also explains that Browett holds a degree in Natural Sciences from Cambridge University (UK) and an MBA from Wharton Business School (University of Pennsylvania).
This chart shows how the executive photos have been visually shuffled twice since Tim Cook became CEO last year. Now, Browett appears as Cook's left-hand man, although his positioning is because his last name begins with "B."
A design proposal for an unnamed retailer at the future Rundle Place (Adelaide, Australia) development is under fire from the state’s planning agency, and a rendering confirms the design is for an Apple store. The criticism of the stainless steel and glass storefront by planning officials isn’t unusual for Apple, and neither is Apple’s secrecy is presenting its proposal to South Australia state officials. As reported by AdelaideNow, planning for the office-retail development began in 2009, and exterior designs have already been approved. However, last month the developer submitted a revision for one specific space that drew immediately criticism from the Development Assessment Commission (DAC), which said the design lacked “identity.” State planning department chief architect Philippe Mortier was even more critical, calling the design “unimaginative and disappointing slavish application of generic corporate style—the manicured world image ahead of the local amenity.” Chief project officer Gabrielle McMahon called upon the DAC to defer approval of the design, and to ask the developer for an amended plan that addresses the criticisms. The development is scheduled to open in 2013. Download (pdf) the design proposal that includes maps, plans and photos of the development, along with the DAC response to the architect’s revisions.
This rendering of a proposed storefront at Rundle Place in Adelaide shows a design without an Apple logo, but with all the other traditional Apple store features, including the interior design. The original design mirrored the storefront to the left, with taller windows and glass awnings. (Click the image for a larger view.)
This elevation view of the project shows the location of the proposed Apple store (right side) along Rundle Mall near Francis Street.
One of the few stores to open in the United States this year will be in California’s central valley, somewhere in the city of Bakersfield. The store will fill in coverage for a 180-mile corridor of agricultural towns that are now without any Apple stores. A job listing posted earlier this week has sparked speculation among Apple fans in the city, but as is now traditional, the listing doesn’t specify an exact location for the future store. One possibility is the Valley Plaza mall south of city center that has most of Apple’s usual neighboring retailers. Apple executives have said that about 40 new stores will open during fiscal 2012, with only about 10 of those within the United States. Based on hiring schedules, the store could open this October.
In the words of the late Steve Jobs as he introduced the first iPhone: “And boy, have we patented it!” Now Apple has submitted patent applications for two of its high-profile retail stores, hoping to keep others from using the revolutionary structural and component features of the designs. The patents are add-ons to design trademarks the company received last year for the Pudong (Shanghai) store glass entrance cylinder and the Upper West Side (NYC) glass curtain storefront. Those design trademarks are more general in description, and are intended to prevent others from creating look-alike structures. The new patent applications are focused on the structural and mechanical aspects of the two stores. Specifically, they patent the glass and support technology of Pudong, and the roof support structures that conceal utility pipes and cables at UWS. Both patents reveal that Apple’s aesthetic of being simple, transparent and unobtrusive is really a complex objective to achieve.
Download (pdf) the patent applications for Pudong and Upper West Side, which include detailed drawings and text descriptions of the designs.
The Pudong patent is officially described as, “A building panel and a building formed therefrom, where the building includes a plurality of building panels arrange to form a cylindrical shape, where each panel comprises a single, or monolithic, glass piece, where each glass piece is substantially rectangular and includes two opposing long sides extending in a height direction and two opposing short sides extending substantially in a width direction, and where each glass piece forms an identical circular arc when viewed from either of the two opposing short sides.”
The 21-page application includes substantial text and 16 diagrams that describe the fine details of the glass cylinder. It notes that, “for long spans of single, or monolithic, glass panels…the conventional laminate structure may deflect for lack of sufficient support.” That difficulty has prevented the creation of large buildings made of glass panels and supports, the application notes.
Several paragraphs note the possible dimensions of such curved glass panels, including 41 feet, 219⁄32 inches tall, set on an inner radius of 16 feet, 113⁄16 inches.
The UWS patent is officially described as, “The present invention relates to support structures including truss assemblies and purlins, the truss assemblies including struts, wherein utilities such as pipes and cables can be contained within the purlins, and can pass through openings in the struts, to thereby be retained by the support structures so as to be hidden from view.”
The 28-page application shows the internal structure of the UWS store and the lay-out of the impressive glass roof. The diagrams show how the various roof structures connect and interact to provide support, yet do not dominate the view. They also show cross-sections that reveal the interior spaces of the support structures, and how electrical cables and fire sprinklers supply pipes are carried through them. The support structures also incorporate other connections, including for track lighting.
The “inventors” of the two patents listed on the applications are:
This drawing from the patent application shows the support structure for the top section of the Pudong store glass cylinder entrance.
This cross-section of the support structure for the Upper West Side store roof shows how the water and electrical utilities (#502 & #504) are invisibly contained within the structure itself.
A key employee in the development of Apple’s original retail store design has left the company, following his former boss to a positon with retailer JC Penney. Benjamin Fay, 40, will become JCP’s executive vice-president for real estate, store design and development, the company announced today in a press release. His departure and those of other long-time Apple retail managers over the past five months hints that they believe the challenges are over for Apple retail, and that their career excitement is located elsewhere. In his new position, Fay will report directly to CEO Ron Johnson, former Sr. VP Retail at Apple who left the company last November for the JCP post. According to JCP Fay will, “guide the development of the all new jcp store of the future intended to create an entirely new interface for retail.” Fay will also be responsible for the implementation of JCP’s new “Shops” concept, store remodels and maintenance. After college and design school, Fay began his career at interior design firm Gensler, which at the time was assisting Apple in creating the original retail store designs. In 2004 he moved to Apple as Sr. director of retail real estate, design and development. During his eight years with Apple Fay made frequent appearances before city planning boards to present new store designs. He is among just a handful of Apple employees who are officially credited with store designs in documents filed with the U.S. Patent and Trademark Office. In JCP’s press release, Johnson praised Fay, saying he is, “an incredibly creative professional with extraordinary leadership skills. Having worked with him over the last 12 years, I am delighted to see Ben step into this new role at jcp.” Johnson left Apple last November, six months after the retail chain’s 10th anniversary and just a month after Steve Jobs passed away. Since then several of Johnson former staffers have followed him to JCP to assume management roles as the company re-invents itself.
It’s official—Apple’s new Sr. V-P Retail John Browett has been on the job since April 20th, when he was officially granted 100,000 shares of stock that could net him millions of dollars over the next five years. Browett took over the position from Ron Johnson, who left last November to become president of retailer JC Penney. Browett has been seen on Apple’s Cupertino campus frequently since last year, and has attended at least one retail store grand opening. According to documents filed with the federal Securities and Exchange Commission (SEC) this morning, Browett will receive “restricted stock units” that are vested, or redeemable, for common stock over a five-year period. After receiving the common stock, Browett is free to keep or sell the shares at any time, at the prevailing price. The vesting schedule is: 5,000 units on October 20, 2012, another 15,000 units on the first anniversary of the grant date, and 20,000 units on each of the second, third, fourth and fifth anniversaries of the grant date. The grants assume that Browett continues to be employed by Apple through each vesting date. Based on yesterday’s closing stock price, the entire stock grant would be worth $56,028,000. Browett’s annual compensation hasn’t been announced yet, although that information could be included in quarterly financial documents to be filed with the SEC later this week. Download (pdf) the SEC filing that details the stock grant.
The natural evolution of the personal computer industry has brought a rare change to Apple’s retail stores: the company has swapped out the Macintosh computers at the kids tables and replaced them with iPads. Store visitors have noticed the change-out over the last 10 days without any fanfare from Apple. The kids tables are an original fixture of the retail stores, accompanied by eye-catching black, spherical foam seats. The tables and Macs at the rear of most stores have been magnets to kids who visit the stores and find the computer screens engaging. But since the introduction of the iPad two years ago, the number of games and education software titles has skyrocketed for the device, while the same categories for the Mac have stagnated. The touch-screen of iPads has also proven to be even more attractive to kids than a Mac screen, bringing about last week’s banishment of Macs. Apple infrequently makes changes to its retail store designs, and only after careful study and consideration that it will continue an excellent customer experience.
At almost the same moment that Apple CEO Tim Cook was telling financial analysts that sales in Spain were weak during the latest quarter, the company was posting job listings for a future store in Zaragoza. The city of 700,000 is located in the northeast part of the country, between the existing Apple stores in Madrid and Barcelona. As first noted by Applesfera, the job listing doesn’t list a specific location for the store. However, it’s likely the store will be inside one of the region’s shopping malls, such as the Gran Casa mall near city center. During a quarterly conference call with financial analysts on Tuesday, Apple CEO Tim Cook revealed that sales in Spain had been “weak” during Q2. He explained that sales in Spain were up during the quarter, but less than the growth rate in Europe or worldwide. In response to an analyst’s question, Cook said the weak sales weren’t related to changes in iPhone subsidy rules made by two Spanish carriers. Instead, the lower results were due to the country’s “terrible economic situation,” Cook said. Based on construction schedules, the Zaragoza store could open by October 2012.
There were few superlatives in Apple’s financial results announced today, including the retail store operation, but the figures did confirm the continued success of the company’s global expansion, particularly into China. All of the results were records for the March quarter, but none achieved an all-time record, which is all held by the previous quarter that includes the Christmas holiday season. Overall, Apple reported sales of $39.1 billion for the second quarter, up 59 percent from the year-ago quarter, but down 15.5 percent from the previous quarter. Company profit was $11.6 billion, an increase of 96 percent from the same quarter of 2011. On the retail side, revenue were $4.3 billion, a substantial 38 percent increase from 2011. Retail store profit totaled $1.1 billion, up 36 percent from the same quarter of 2011. Other retail figures followed the same pattern—no records, but solid results. The stores sold 826,000 Macs during the quarter, contributing to an overall sales increase that beat the global PC market. Apple’s stores hosted a substantial 85 million visitors, who spent an average of $12.2 million per-store.
Update: In a 10-Q financial filing with the SEC on Wednesday, Apple added three other figures to the retail segment’s quarterly results: capital expenditures for the chain were $362 million, lease commitments now total $2.8 billion, and the retail segment has 42,200 full-time equivalent employees.
During a conference call with analysts, CFO Peter Oppenheimer reiterated previous statements that “about half” the Macs sold in the retail stores were to people that were new to the Macintosh. He did not mention any future stores or say how many stores would open in fiscal 2012. Last October Oppenheimer said Apple would open “about 40″ new stores during 2012, with about three-quarters outside the United States.
Beyond the usual graphs that show the rise and fall of profit and loss, there’s an indication that Apple’s retail store chain is maturing, and becoming just one of many methods for selling Macs, iPods, iPhones and iPads. A graph (below) of the chain’s contribution to Apple’s overall revenues shows a decline since 2009, as the number of other points-of-sale have increased. For example, during today’s conference call with financial analysts, CEO Tim Cook said that in China there are 1,800 points of sale for Mac computers. In contrast, there are just six Apple stores in the country, including one in Hong Kong, that sell Macs.
More significantly, the number of points-of-sale in China is increasing rapidly: the number of resellers that can sell Macs was up 70 percent in China since last year, and those selling the iPhone were up 138 percent to over 11,000. “But 11,000 is a much smaller number than we have in the U.S.,” Cook said, “and obviously, China will, in the next few years, be a bigger opportunity. And so yes, we’ve expanded. We’ve expanded a lot. However, there’s a lot of headroom here in our view.”
As the number of other points-of-sale increase globally, Apple's retail stores no longer have the burden of being a primary sales location for the company's products.
A third Apple retail store will open this Saturday to serve the suburbs of Madrid (Spain), inside the brand-new Gran Plaza 2 shopping center northwest of city center. The store is the sixth to open in Spain, making it among the fastest-growing countries for Apple’s retail chain. Gran Plaza 2 is located in an upscale residential area, which mall management boasts has “the highest per capita income” in the region. The new mall covers about 619,000 square-feet with 190 shops, and will hold its own grand opening at the same time as the Apple store. The store will open at 10 a.m., and will be among several Apple stores that will not be open for business on Sundays.
Tipsters have identified yet another store on Apple’s list of locations that will move and expand to accommodate the growing base of visitors, this time at the Arden Fair store in Sacramento (Calif.). According to sources, the store will move from its upper-level, 30-foot wide space to the former Pottery Barn space on the ground floor. The move will give the store an impressive 78-foot wide storefront, and will upgrade the store’s interior from about 3,650 square-feet to 9,685 square feet. A visit to the current store reveals vintage features: wood floor and frosted glass wall partitions. During a recent weekday visit, there were 31 employees providing service to at least 90 customers, mostly concentrated near the rear Genius Bar. The future space will allow more room for product displays, but also provide more tables for personal training and product setup. A timeline for the Apple store move isn’t known—the future space is now occupied by a temporary Ann Taylor store while that store’s home space is being renovated.
The existing Apple store on the upper level will move later this year to a larger space on the lower level.
The existing store occupies a 30-foot wide space on the upper level. (click image for larger view)
The cramped interior of the store is crowded with customers at most hours.
The interior of the store is particularly crowded in the back half, near the Genius Bar. (click image for larger view)
The store is among the few with wood floors and frosted glass partitions, a left-over from the original store design.
The Apple store will eventually move to this space, now temporarily occupied by an Ann Taylor store. (click image for larger view)
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